Question 1

2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,an increase in the price level from P2 to P3 will: A)  increase real output from Qf to Q2. B)  change aggregate supply from AS2 to AS1. C)  decrease real output from Q2 to Q1. D)  not change the level of real output." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,an increase in the price level from P2 to P3 will:

Accepted Answer

A)   increase real output from Qf to Q2.
B)   change aggregate supply from AS2 to AS1.
C)   decrease real output from Q2 to Q1.
D)   not change the level of real output.E) A) and B)
F) A) and C)

Question 2

How is the immediate short-run aggregate supply curve sloped? Explain.

Accepted Answer

The immediate short-run aggreg...

Question 3

Other things being equal,the higher the price level,the lower the level of domestic output purchased.This occurs because of:

Accepted Answer

A)   the real-balances effect.
B)   consumer spending on capital goods.
C)   the full-employment-unemployment rate.
D)   the sensitivity to demand-pull inflation.E) A) and B)
F) A) and C)

Question 4

An economy is employing 2 units of capital,5 units of raw materials,and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10,each unit of raw materials,$4,and each unit of labour,$3.
-Refer to the above information.As a result of the change indicated in the previous question,the aggregate:

Accepted Answer

A)   supply curve would shift to the left.
B)   supply curve would shift to the right.
C)   demand curve would shift to the left.
D)   demand curve would shift to the right.E) B) and D)
F) A) and B)

Question 5

Shifts in the aggregate supply curve are caused by changes in:

Accepted Answer

A)   consumption spending.
B)   the quantity of real output demanded.
C)   the quantity of real output supplied.
D)   one or more of the determinants of aggregate supply.E) A) and B)
F) A) and C)

Question 6

The short-run aggregate supply curve is upward-sloping because:

Accepted Answer

A)   of the interest-rate effect.
B)   higher price levels create incentives to expand output when resource prices remain constant.
C)   of the net export effect.
D)   higher price levels create an expectation among producers of still higher price levels.E) A) and B)
F) C) and D)

Question 7

Which effect best explains the downward slope of the aggregate demand curve?

Accepted Answer

A)   a multiplier effect
B)   an income effect
C)   a substitution effect
D)   a real-balances effectE) B) and C)
F) A) and D)

Question 8

Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

Accepted Answer

A)   consumer spending.
B)   net export spending.
C)   government regulation.
D)   profit expectations on investment projects.E) B) and C)
F) None of the above

Question 9

An expected decline in the prices of consumer goods will:

Accepted Answer

A)   decrease aggregate demand.
B)   increase the quantity of real domestic output demanded.
C)   increase aggregate demand.
D)   decrease the quantity of real domestic output demanded.E) A) and C)
F) A) and B)

Question 10

Some economists argue that it is easier to resolve demand-pull inflation than cost-push inflation.Use the aggregate demand-aggregate supply (short-run)model to explain this assertion.

Accepted Answer

To address demand-pull inflation,the gov...

Question 11

The aggregate demand curve:

Accepted Answer

A)   is upward sloping because a higher price level is necessary to make production profitable as production costs rise.
B)   is downward sloping because production costs decline as real output increases?
C)   shows the amount of expenditures required to induce the production of each possible level of real output.
D)   shows the amount of real output which will be purchased at each possible price level.E) All of the above
F) A) and B)

Question 12

1 shifts to AD2,then at P1Q3 output demanded will: A)  equal output supplied. B)  exceed output supplied. C)  be less than output supplied. D)  be at stable full-employment GDP." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.When AD1 shifts to AD2,then at P1Q3 output demanded will:

Accepted Answer

A)   equal output supplied.
B)   exceed output supplied.
C)   be less than output supplied.
D)   be at stable full-employment GDP.E) A) and B)
F) A) and C)

Question 13

Which would most likely shift the aggregate supply curve? A change in:

Accepted Answer

A)   consumer expectations.
B)   government spending.
C)   excess capacity in business.
D)   prices of imported resources.E) B) and C)
F) B) and D)

Question 14

A decrease in taxes will cause a(n) :

Accepted Answer

A)   decrease in the quantity of real domestic output demanded.
B)   increase in the quantity of real domestic output demanded.
C)   increase in aggregate demand.
D)   decrease in aggregate demand.E) None of the above
F) All of the above

Question 15

Refer to the diagram below.A shift in the aggregate demand curve from AD1 to AD0 might be caused by a(n) : 1 to AD0 might be caused by a(n) :   A)  decrease in aggregate supply. B)  decrease in the amount of output supplied. C)  increase in investment spending. D)  decrease in net export spending." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   decrease in aggregate supply.
B)   decrease in the amount of output supplied.
C)   increase in investment spending.
D)   decrease in net export spending.E) None of the above
F) B) and D)

Question 16

A decrease in government spending will cause a(n) :

Accepted Answer

A)   increase in the quantity of real domestic output demanded.
B)   decrease in the quantity of real domestic output demanded.
C)   decrease in aggregate demand.
D)   increase in aggregate demand.E) A) and B)
F) None of the above

Question 17

In the table below are aggregate demand and aggregate supply schedules.
 
(a)Suppose in Year 1,aggregate demand is shown in columns (1)and (2)in the above table and short-run aggregate supply is shown in columns (1)and (4)in the above table.What will be the equilibrium level of real GDP and the equilibrium price level?
(b)Suppose in Year 2,aggregate demand changes and is now shown in columns (1)and (3).What will be the new equilibrium level of real GDP and the new equilibrium price level?
(c)Suppose in Year 3,aggregate demand changes and is now shown again in columns (1)and (2).What will be the new level of real GDP and the new price level if prices and wages are completely flexible downward?
(d)Suppose in Year 3,aggregate demand changes and is now shown again in columns (1)and (2).What will be the new level of real GDP and the new price level if prices and wages are completely inflexible downward?

Accepted Answer

(a)Real GDP will be $1,700 and the pric...

Question 18

With output and input prices fixed,the immediate short run aggregate supply curve is:

Accepted Answer

A)   vertical.
B)   upward sloping.
C)   horizontal.
D)   downward sloping.E) B) and C)
F) A) and D)

Question 19

A change in aggregate supply would be caused by a change in:

Accepted Answer

A)   the price level.
B)   aggregate demand.
C)   an aggregate supply determinant.
D)   the quantity of real output supplied.E) B) and C)
F) A) and D)

Question 20

Refer to the diagram below.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the short run,cost-push inflation could best be shown as: 2 and that the economy initially is operating at its full-employment level of output Qf.In the short run,cost-push inflation could best be shown as:   A)  a leftward shift of aggregate supply from AS2 to AS3. B)  a move from b to c on AS2. C)  a move from b to c to d. D)  a move from b to f to d." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   a leftward shift of aggregate supply from AS2 to AS3.
B)   a move from b to c on AS2.
C)   a move from b to c to d.
D)   a move from b to f to d.E) B) and D)
F) A) and B)

Exam 12: Aggregate Demand and Aggregate Supply

Which would most likely shift the aggregate supply curve? A change in:

Correct Answer
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The aggregate demand curve:

Correct Answer
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Correct Answer
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(a)Real GDP will be $1,700 and the pric...
View Answer

Which effect best explains the downward slope of the aggregate demand curve?

Correct Answer
verified

Some economists argue that it is easier to resolve demand-pull inflation than cost-push inflation.Use the aggregate demand-aggregate supply (short-run)model to explain this assertion.

Correct Answer
verified
To address demand-pull inflation,the gov...
View Answer

Shifts in the aggregate supply curve are caused by changes in:

Correct Answer
verified

-Refer to the above diagram.When AD₁ shifts to AD₂,then at P₁Q₃ output demanded will:

Correct Answer
verified

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the long run,an increase in the price level from P₂ to P₃ will:

Correct Answer
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The short-run aggregate supply curve is upward-sloping because:

Correct Answer
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Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

Correct Answer
verified

Refer to the diagram below.A shift in the aggregate demand curve from AD₁ to AD₀ might be caused by a(n) :

Correct Answer
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A decrease in taxes will cause a(n) :

Correct Answer
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Refer to the diagram below.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the short run,cost-push inflation could best be shown as:

Correct Answer
verified

How is the immediate short-run aggregate supply curve sloped? Explain.

Correct Answer
verified
The immediate short-run aggreg...
View Answer

Other things being equal,the higher the price level,the lower the level of domestic output purchased.This occurs because of:

Correct Answer
verified

A change in aggregate supply would be caused by a change in:

Correct Answer
verified

An expected decline in the prices of consumer goods will:

Correct Answer
verified

With output and input prices fixed,the immediate short run aggregate supply curve is:

Correct Answer
verified

A decrease in government spending will cause a(n) :

Correct Answer
verified

Correct Answer
verified

Exam 12: Aggregate Demand and Aggregate Supply

Which would most likely shift the aggregate supply curve? A change in:

Correct AnswerverifiedShow Answer

The aggregate demand curve:

Correct AnswerverifiedShow Answer

Correct Answerverified(a)Real GDP will be $1,700 and the pric...View AnswerShow Answer

Which effect best explains the downward slope of the aggregate demand curve?

Correct AnswerverifiedShow Answer

Some economists argue that it is easier to resolve demand-pull inflation than cost-push inflation.Use the aggregate demand-aggregate supply (short-run)model to explain this assertion.

Correct AnswerverifiedTo address demand-pull inflation,the gov...View AnswerShow Answer

Shifts in the aggregate supply curve are caused by changes in:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.When AD1 shifts to AD2,then at P1Q3 output demanded will:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the long run,an increase in the price level from P2 to P3 will:

Correct AnswerverifiedShow Answer

The short-run aggregate supply curve is upward-sloping because:

Correct AnswerverifiedShow Answer

Which would be considered to be one of the factors that shift the aggregate supply curve? A change in:

Correct AnswerverifiedShow Answer

Refer to the diagram below.A shift in the aggregate demand curve from AD1 to AD0 might be caused by a(n) :

Correct AnswerverifiedShow Answer

A decrease in taxes will cause a(n) :

Correct AnswerverifiedShow Answer

Refer to the diagram below.Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf.In the short run,cost-push inflation could best be shown as:

Correct AnswerverifiedShow Answer

How is the immediate short-run aggregate supply curve sloped? Explain.

Correct AnswerverifiedThe immediate short-run aggreg...View AnswerShow Answer

Other things being equal,the higher the price level,the lower the level of domestic output purchased.This occurs because of:

Correct AnswerverifiedShow Answer

A change in aggregate supply would be caused by a change in:

Correct AnswerverifiedShow Answer

An expected decline in the prices of consumer goods will:

Correct AnswerverifiedShow Answer

With output and input prices fixed,the immediate short run aggregate supply curve is:

Correct AnswerverifiedShow Answer

A decrease in government spending will cause a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

(a)Real GDP will be $1,700 and the pric...
View Answer

Correct Answer
verified

Correct Answer
verified
To address demand-pull inflation,the gov...
View Answer

Correct Answer
verified

-Refer to the above diagram.When AD₁ shifts to AD₂,then at P₁Q₃ output demanded will:

Correct Answer
verified

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the long run,an increase in the price level from P₂ to P₃ will:

Correct Answer
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Correct Answer
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Correct Answer
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Refer to the diagram below.A shift in the aggregate demand curve from AD₁ to AD₀ might be caused by a(n) :

Correct Answer
verified

Correct Answer
verified

Refer to the diagram below.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In the short run,cost-push inflation could best be shown as:

Correct Answer
verified

Correct Answer
verified
The immediate short-run aggreg...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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